The United States Dollar is trading range-bound this morning with minimal movement overnight, ever so slightly stronger against the majority of its G10 peers.
Overview
Markets appear to be entering a more comfortable period of month-end flows that are keeping the Buck afloat ahead of the FOMC’s minutes release from its last meeting this afternoon. With little in the way of hard data from around the world today, any trade or central bank headlines are likely to come to the forefront of traders’ minds. Treasury yields around the world are also in focus today, long-dated government debt especially, after a few rather dreary auctions across the globe.
The FOMC minutes from its May 7 meeting, to be released at 2 PM today, are more likely than not to show the voting members of the committee agree on a “wait-and-see” approach given economic uncertainty and risks of resurgent inflation. Many Fed speakers over the last few weeks since the meeting have emphasized this as well, though their projections on how much the Fed will ease interest rates this year do differ a bit. Chair Jerome Powell signaled at his press conference following the meeting that there is a fairly high bar for interest rate cuts this year, and this has been echoed since then by several regional governors. It’s important to note, however, that the big picture on trade has changed significantly since this meeting, following Trump’s de-escalation with China earlier this month as well, so this retroactive snapshot may not be entirely accurate to the current thinking of the FOMC.
The data calendar, as well, is set to bring the fireworks to the end of the month with the second reading of Q1 GDP tomorrow and the PCE price index Friday. Q1 GDP’s first reading showed that the US economy actually contracted last quarter, and this revision is expected to show no change to that release. Personal consumption is expected to continue to slow, while the GDP price index should hold steady at 3.7%. Though the news cycle has been quite busy since the first release of these figures at the end of April, the specter of stagflation still looms large over the US economy.
What to Watch This Week…
- US Q1 GDP 2nd Reading, Thursday 8:30 AM
- US Personal Income & Spending, Friday 8:30 AM
- US PCE Price Index, Friday 8:30 AM
- Monex USA Online is always open
The complete Economic Calendar can be found here.
EUR ⇓
The single currency remains in focus today and is showing further weakness after sliding through yesterday’s session, down another quarter of a percent against the Buck in overnight trading. Trade negotiations between the EU and the US are driving flows for the pair, but not to the benefit of the EUR, as month-end flows continue to aid the USD. EU Trade Commissioner Maros Sefcovic this morning said he has agreed to speek with Jamieson Greer and Howard Lutnick every other day, citing recent ‘good calls’ that could potentially pave the way for a deal on the world’s largest trading partners before the July 9 deadline for the implementation of 50% tariffs against the EU.
NZD⇑
The New Zealand Dollar is the only currency in the G10 managing to maintain its status against the USD this week, posting a small gain through yesterday’s session and trading relatively flat today. The Reserve Bank of New Zealand lowered interest rates by 25 basis points overnight, as widely expected, and said it believes its benchmark rate is now close to neutral, neither slowing nor stimulating economic activity. New Zealand’s shorter-dated bond yields rose in response, but longer-dated yields performed better than New Zealand’s global peers, keeping NZD above most of the currency pack and certainly above AUD, which slid nearly half a percent.
